Manuel L. Margate

Negros Women for Tomorrow Foundation, Inc.

Bacolod city, Negros Occidental

Philippines

Improving Credit Portfolio Through Non-Financial Services

Flow of Discussions 1. Introduction Brief History of NWTF Where we are – Areas of Operation Our Target Clientele The Social Impact Goals

2. MFDW Action Research, Phase 1 - Diagnosis and Findings (in capsule) Phase II –Implementation and Testing of the two

Innovations

Topics . . . . . continued

3. The Entrepreneurships Tools (GYB & SYB) with the comparative performance of the Pilot branch (2009 & 2012);

4. The Individual Emergency Fund (IEF) with the comparative performance of the Pilot branch (2009-2012);

5. The Deep Country Approach Video.

Brief History of NWTF

Founded in 1984 as a Philippine NGO, that aims to help women achieve self-sufficiency and self-reliance;

It sought to increase women's awareness of their economic potentials, to increase their skills and productivity and to improve their quality of life.

• In 1989, NWTF accepted the challenge of replicating the Grameen Bank credit methodology and established Project Dungganon, that made NWTF one of the earliest MFIs in the Philippines.

In 2000 (after 11 years with group lending), NWTF started the Individual Lending Program.

Also in 2000, NWTF started the Micro-Insurance Package

and the Scholarship Program. In 2004, the Micro-Crop Project was launched to cater

the needs of the Agrarian Reform beneficiaries. In 2005, opened the Microfinance Thrift Bank

Brief History Continued:

Area of Operations

Over $2/day per capita $ 2

$ 1

Can be considered

as vulnerable

- Poverty line is $ 1/day per capita according to World Bank

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Upper Half of Below Poverty Line according to World Bank

Lower Half of Below Poverty Line according to World Bank

$ 0.92

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- Poverty line is $ 0.92/day per capita according to NCSB

validated by IBON

$ 1.46 - New poverty line for NCR

$ 0

Our Target Clientele:

The Poor Woman in the Dilapidated House

The Poor Woman in the Dilapidated House, the

Reason Of Our Existence. . . She is

• At the bottom of the pyramid • Less educated; • Financially excluded; • Poor since birth; • Very vulnerable

But . . . . She has the “IGSS” (Income Generating Survival Skills).

These survival skills serve as a proxy indicator for capacity.

For NWTF, IGSS enable the poor people to survive long years of

poverty without any intervention.

Social Impact Goals 80-50-30

80% of clients should be below the poverty line

at entry

50% of clients in upward movement within three

years

30% of clients should move out of poverty five

years after entry

Client Responsive Developmental Services 1. Clients Training (Trainings/Seminars/Workshops)

2. Mother,Child and Family Health (Medical Camps: Medical

Missions, Dental Missions, Operation Tuli, Fun Robics & Water for the Poor )

3. Education (DSP,DEP and Educational Loan)

4. Environmental Awareness (Campaign & Promotion of

Environmental Friendly Products, Adopt a tree and Tree Growing & Creation of Modules for Center Meeting use)

5. Business Development Services and Skills Training (Assist Entrepreneurs in Business Registration, Licensing, Recommend to MOTY & Sipag Awards); Conduct Skills Training such

as Home Care Products, Meat Processing, Massage and Paper Craft.

CLIENT SERVICES DEPARTMENT

Through ... a process

of assessing risks and taking steps to either eliminate or to reduce risks through various client responsive developmental services.

NWTF wants to improve the risk management capacity of the poor clients . . .

MFDW Action Research Phase I(2008): Selection, introduction

& diagnosis

• NWTF, 1 of the 25 MFIs Selected worldwide that participated in the client survey to identify Decent Works deficits;

The MF4DW Diagnostic Study in 2008 Identified

Risk Management and Lack of Business Management Skills as the most pressing challenges for NWTF Clients: • 62% of the Income Generating Projects were not registered; • 19% of sample clients already had late payment; • 17% had experience difficulties in loan repayment in the last year: (30% related to illness/accident, 16% due to weather condition, 12% due to school fees, 12% due to economic downturn)

• 35% of clients use loans from other sources: (47% from other MFI, 25% from Cooperatives, 12% from money lenders, 12% said, they need the loan to pay back another loan)

• 50% of clients had been confronted with a large unforeseen expenses in the past year: (75% most common accident/illness, 13% Catastrophe, 6% death of a family member)

• 4% of clients could not cover household expenses by joint household income; • 4% of clients could not cover business expenses by business income.

Phase II (October 2009-December 2011)

Two strategies of interventions were developed for RISK MANAGEMENT/OVER-INDEBTEDNESS To reduce vulnerabilities of poor clients to risks of

over-indebtedness, through the institutionalization of

a Robust-More Responsive Rebates System and

Entrepreneurship Training.

MFDW Action Research

The Innovations

Combine financial with Non-Financial Services:

Entrepreneurship training

Innovate in products:

Individual Emergency Fund

Combine Financial with Non-Financial Services:

Entrepreneurship training

Start and Improve Your Business

(SIYB) program

• The SIYB program originated in Sweden

• Has been developed by the International Labour

Organization

• Comprises a range of material based, short,

modular management training courses for small-

and medium scale enterprises

• Today is used in more than 90 countries all over

the world

The Start and Improve Your Business Program

• Development Objective:

To contribute to economic development and the creation of new and better jobs.

• Immediate objectives:

To strengthen the capacity of local business development services (BDS) organizations to provide cost-effective, quality business start-up and management training courses for Micro, Small, and Medium Enterprises (MSMEs)

• As a result of SIYB training, to enable these MSME to start and grow their own enterprises and to create employment for others in the process

Objectives of SIYB

Target Groups

Small-scale

Micro-scale

Medium-scale

Income-Generating

Projects

Enterprises EYB

SYB

IYB

GYB

THE NEED TO EDUCATE OUR

CLIENTS AT START UP…

BUSINESS PROCESS

Poverty Mapping

Administering

the PPI &

Uncovering the

IGSS

> GYB is incorporated in the Compulsory Group Training for applicants (CGT).

GRT

Loan Disbursement

Center Meeting/ Repayment

Loan Utilization Check

Reloan

Areas of Concern: Some new clients don’t have business ideas at entry;

Some Clients Shifting business every loan cycle

The EntrepreneurshipTraining

The (GYB) Entrepreneurship training as part of NWTF process in recruiting clients, helps the clients in improving the quality of business proposals, reducing the risk of business failures.

Clients Trained on GYB-SYB

Clients Participation

MF4DW ACTION RESEARCH

Clients Trained on GYB-SYB

Surveyed Not Surveyed TOTAL

BASELINE SURVEY 559

1ST Follow Up Survey 240

2ND Follow Up survey 471

3RD Follow Up survey 430

4th Follow Up survey 400

184 319 503

76 88 164

110 129 239

104 0 104

Total 474 536 1,010

Loan Officer-Respondents

Increase in income

Growth in business

New business venture

One client shared that prior

to attending the training she

didn’t do any recording. She

started recording after the

training.

Correct pricing meant their

business is now making a

profit.

Before, if you talk to the spouses, they don’t know anything about the business, their family goal and what they want to achieve in life.

Now, the spouses have some level of understanding about the business and are more involved.

Changes Observed After Attending the Training

Client-Respondents

Our life is better now, our

business improved

My profit increased a little

My business grew, Increase

in product with right pricing

Now I know how to budget

Increase in customers

We were able to buy

television & do some repair

at the house and send the

children to school

There are more customers now because I changed my attitude

Now I have more clients and I have started another business

We saw the difference in terms of money

The business helped in meeting the needs of my family

Improvement in the way I deal with my customers and increase in income

I treat my customers better now

My family is more involved in the business

Changes Observed After Attending the Training

Bago Branch

2012

December

2011

December

2010

December

2009

December

Active Members 3,854 2,549 1,723 2,098

Retention Rate 97.52% 82.98% 65.74% 67.87%

Loan Outstanding

Balance

16,390,683 Ph

381,178.67 US

11,680,969 Ph

253,934.10 US

7,810,961 Ph

169,803.50 US

6,441,231 Ph

140,026.76 US

Average Loan Size 7,987 Ph

185.74 US

9,348 Ph

203.22 US

6,993 Ph

152.02 US

8,114 Ph

176.40 US

Portfolio At-Risk

Rate

0.19% 0.24% 1.08% 7.00%

PERFORMANCE OF THE ENTREPRENEURSHIP PILOT BRANCH

Individual Emergency Fund (I E F)

What is Individual Emergency Fund (IEF)?

A fund established as buffer to

bolster Clients’ capacity to manage

emergencies.

What is the composition

of the IEF?

It is composed of the following:

1. The existing Individual Compulsory Fund (ICF) &

2. Interest Refund on Loans (Rebates)

What comprise the IEF?

The ICF is the 5% of the Loan proceeds deducted upon the disbursement of loans and

The Interest Refund on Loans or Rebates is

equivalent to 10% of interest paid on loan, as incentive to clients for good performance (ie. 100% on time repayment during a particular loan cycle).

WHY CLIENTS NEED THE INDIVIDUAL EMERGENCY FUND (IEF)?

Emergency strikes without notice in an unexpected time and degree.

You have to prepare for it, or Perish with it . . . . .

PHILIPPINES

In a 3 week period in Nov/Dec 2004 four consecutive typhoons and tropical storms hit the Philippines. The landslides and flash floods caused by these storms resulted to massive damage on the eastern coast of Luzon. 1,060 died, 1,023 injured, 559 missing. 53,000 families were made homeless and over 10,000 hectares

of cropland was destroyed. Late in 2006, four typhoons hit including the first super typhoon in the country’s history.

The Individual Emergency Fund (IEF)

The IEF boosts and compliments the safety net available to the clients’ during emergencies and eliminate their tendency to draw funds from their business for emergency purposes.

Clients' Initial Reactions to IEF

Positive

• It will help them learn how to save for the future.

• They know they can easily use their own money in

times of emergencies.

• The savings is for the individual's account and not for

the center.

• No maintaining balance required.

• They will no longer experience the difficulty of

waiting for help from government and other people

in times of needs.

Clients' Initial Reactions to IEF Negative

• At first, the clients reacted that the interest rebates be

added to the emergency fund, as they use it for their

children's school expenses (13 clients or 11% of the

respondents)

• Withdrawal at the branch office would entail added

cost for them because they have to travel to the office

(35 clients or 29% of the respondents.

Likes Dislikes

They have savings to get in times

of emergency

• Easy to process and withdraw

• Can withdraw whole amount, since

there is no maintaining balance

• Savings are for their own use not

for the center

• They can get bigger amount in

times of emergency

• Savings is earning interest

• While they continue to renew

loans, they increase their savings

• Not any day in times

of emergency they can

withdraw, they have to

wait for the schedule,

which is only every

Friday.

• They have to spend

for the doctor’s check-

up first before they

can withdraw the

emergency fund.

Clients' Satisfaction Summary

Bogo Branch

2012

December

2011

December

2010

December

2009

December

Active Members 4,335 2,653 2,028 1,507

Retention Rate 94.19% 90.52% 84.92% 53.00%

Loan Outstanding Balance 16,029,480 Ph

372,778.604 US

9,961,104 Ph

216,545.73 US

7,653,918 Ph

166,389.52 US

6,430,489 Ph

139,793.23 US

Average Loan Size 7,299 Ph

169.74 US

6,803 Ph

147.89 US

7,278 Ph

158.22 US

7,465 Ph

162.282 US

Portfolio At-Risk Rate 0.0% 0.19% 0.30% 14.90%

Members Funds:

ICF/IEF (Compulsory) 2,291,137 Ph

53,282.25 US

2,025,847 Ph

44,040.15 US

1,782,296 Ph

38,745.57 US

2,072,451 Ph

45,053.28 US

Alkansiya Fund

(Voluntary)

841,775 Ph

19,576.16 US

612,641 Ph

13,318.28 US

486,781 Ph

10,582.195 US

397,164 Ph

8,634 US

Pag-asa Fund (Center

fund)

623,977 Ph

14,511.09 US

719,215 Ph

15,635.108 US

326,197 Ph

7,091.239 US

269,856 Ph

5,866.434 US

IEF share to Total Fund 83.79% 60.33% 68.67% 75.65%

PERFORMANCE OF THE IEF PILOT BRANCH

Negros Women for Tomorrow Foundation, Inc.

I. Number of Area: 20 Area Offices

II. Provinces Covered: 12

III. Total Branches: 62

Negros Occidental Negros Oriental Cebu Bohol Leyte Southern Leyte Samar Iloilo Capiz Kalibo Palawan

IV. Number of Officers and Staff

19 - Branches 5 - Branches 10 - Branches 2 - Branches 5 - Branches 3 - Branches 3 - Branches 4 - Branches 3 - Branches 3 - Branches 5 - Branches

1029

2012

December

2011

December

2010

December

2009

December

Active

Members 157,475 121,776 91,850 81,963

Retention

Rate 97.88% 83.19% 85.55% 77.38%

Loan

Outstanding

Balance

727,362,591

16,195,409.09$

606,352,595

13,474502.11$

451,686,782

10,037,484.04 $

374,406,788

8,320,150.84 $

Average Loan

Size 8,744 203.35 $

9,659 214.64 $

8,460 188 $

9,630 214 $

Portfolio At-

Risk Rate 3.30% 2.32% 2.68% 3.5%

NWTF PERFORMANCE 4-Year Period

Deep Country Approach

Mabuhay!!!

www.nwtf.org.ph